Amazon shipping costs and seller fees can add up heavily to your expenses. If you’re a small business owner or have a limited budget, you are always looking for cost-effective solutions.
In this article, we will mention several ways to decrease shipping costs so you can see how you can reduce your costs to sell on Amazon!
What Are Amazon Shipping Costs for Sellers?
On average, Amazon charges all sellers 15% of the product’s selling price. You can list your products on Amazon for free, but as soon as sales are made, the platform takes its share. This price differs according to the product category.
Except that, you will be subject to various shipping-related fees depending on whether you are selling through Fulfillment by Merchant (FBM) or Fulfillment by Amazon, also known as FBA.
For FBA Sellers
The Amazon FBA shipping cost includes three main types of fees: fulfilment fees, inventory storage fees, and shipping fees for sending goods to the FBA warehouse.
FBA Fulfilment Cost
The entire picking, packing, and delivery to customers for each order is covered by the FBA fulfilment fee.
The shipping weight and what you are selling determine the fulfillment fee for each package. Moreover, there are two different pricing structures for the FBA fulfillment fee.
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Low-price FBA fulfilment fee pricing is used when an item is priced under $10.
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Regular FBA fulfilment fee pricing is applied when an item is priced above $10.
FBA Inventory Storage Cost
To take advantage of the Amazon FBA program, you need to store your products in Amazon’s fulfilment centres. FBA inventory storage fees are calculated based on how much space your products occupy. The cost of storage for each cubic foot ranges from $0.56 to $4.28 per month.
If you are storing in busier months, such as October, November, and December, the storage fee will be comparatively higher.
Furthermore, Amazon charges long-term storage fees for unsold inventory for more than one year. To avoid this fee, you should keep track of your inventory and look for unsold items.
Apart from the fees charged by Amazon, you also need to consider the Amazon shipping costs before local FBA warehouses handle goods. International shipments can be very expensive.
Related reading: FBA Shipping Guide
For FBM Sellers
Amazon FBM (Fulfilled by Merchant) sellers are in charge of all packing, storage, and shipping. They have more responsibility and control over Amazon shipping costs and packaging.
FBM sellers often manage their products with the help of third-party logistics (3PL) providers and freight forwarders, especially as their businesses grow or if they sell internationally. For one thing, Freight forwarders can help manage sea freight or air shipping, customs clearance, and inland delivery. For another, FBM sellers can store their goods in a 3PL warehouse and outsource order fulfillment, and even returns.
How to Calculate Amazon Shipping Costs for Sellers?
Many factors are taken into consideration when figuring out the Amazon shipping cost. A few of them include:
Product Dimensions and Weight
To estimate Amazon shipping costs, the dimensional weight should be considered. It is used by carriers (and Amazon) that take into account the box’s size as well as its actual weight. Because it takes up more room on the truck, a large, light item may cost more than a small, dense one.
Shipping Distance
Longer distance means more fuel and time are put into the shipping process, which leads to higher Amazon shipping costs. For example, delivering a package to a rural address will be more expensive than to a place just near the local FBA fulfillment center. For another example, shipping cargo from a warehouse in China to a FBA warehouse in Japan is much cheaper than shipping from China to the USA Amazon.
Carrier Rates and Surcharges
If you’re FBM, the final cost of shipping is determined by couriers such as UPS, FedEx, and USPS. Your bill can quickly increase due to their fuel surcharges, delivery area surcharges, and other add-ons.
Fulfillment Method
Product size tier, storage duration, and whether your product needs preparation or special handling all affect FBA fees. FBM sellers are mostly forced to use higher retail pricing or bargain for their own rates, because they have to arrange everything.
How Can I Reduce Amazon Shipping Costs?
The shipping cost on Amazon can take up your profits, and this affects small businesses more. Here are a few tips on how you can lower shipping costs for Amazon:
Negotiate With Carriers and Freight Forwarders
Carefully decide the shipping partners you are using and the delivery options you are choosing. You can research different carriers focusing on their areas of operations, pricing structures, and services they are offering for each category. Other than that, check their customer service quality, delivery speed, and reliability.
Don’t limit yourself to a single carrier. And obtain competing quotes and volume-based discounts if needed to cut down the Amazon global shipping cost.
Consider collaborating with a third-party logistics provider (3PL) or freight forwarder if this seems like a hassle. They may pass on the significant savings to you.
Choose the Product Category Wisely
Another way to decrease Amazon seller shipping costs is to choose your product category wisely, as the products determine the cost you pay. For instance, apparel will cost you less, while dangerous and fragile items can lead to more referral and storage fees.
Packaging
Efficient packaging also keeps your products safe and increases customer satisfaction. Choose the right size of packaging material, which will reduce waste and your Amazon shipping costs. Steer clear of void fill and excessive padding. For non-breakable items, use poly mailers instead.
In addition, you can source free packaging materials. Look for used boxes and newspapers for packing your products. This also benefits the environment.
Amazon’s Shipping Programs
You can also use Amazon’s programs to lower shipping costs. These programs include Fulfilment by Amazon (FBA), Seller Fulfilled Prime (SFP), and Multi-Channel Fulfillment (MCF).
FBA benefits sellers by utilizing Amazon’s logistical network. This handles customer service and returns, and potentially lowers the delivery cost. When you have to ship orders from your website, Etsy, or eBay, the MCF also works. Amazon’s logistics network makes it less expensive than working with different fulfillment partners.
On the other hand, SFP allows sellers to set up logistics themselves, avoiding FBA fees, and keep the Prime badge. This enhances customer service and brand loyalty. Meanwhile, SFP requires sellers to meet strict performance metrics, like 1-2 day shipping or weekend pickups. It is not a good idea for sellers who don’t have a robust and reliable logistics network to cover the Amazon Prime shipping cost.
Use of Technology
Inventory management systems track records of your products, manage orders, forecast demand, and make sure that the orders are processed accurately. Amazon sellers can use these advanced technologies, such as shipping software, inventory management systems, and tracking and analytics tools. Furthermore, many 3PLs integrate with Amazon to receive order data in real-time.
These technologies provide valuable insights to improve efficiency, reducing the cost of Amazon shipping.
Streamline Your Order Processing
Batch processing allows businesses to handle larger orders without increasing processing time, cost, and staff. Streamlining order processing through automation and batch processing helps you enhance the overall operational productivity of your business and reduce Amazon shipping costs.
get international amazon shipping cost
Conclusion
Without sugarcoating it, one of the biggest expenses for sellers is Amazon shipping costs. But through choosing the right product category, negotiating with couriers for discounts, using the latest technology, using free packaging materials, and so on, you can leverage these to gain a competitive edge.
Frequently Asked Questions (FAQs)
Does Amazon FBA charge you for shipping?
No, for FBA sales, there is no specific shipping cost. However, if you check through the revenue calculator, you will see it included in the FBA Fulfilment Fees.
How do I avoid FBA storage fees?
It is hard to completely avoid the storage fees. However, a smart trick to reduce Amazon storage fees is to start with your inventory levels. Don’t order a lot of products instantly. Instead, keep a track of your inventory and use Amazon’s tools, such as the Inventory Performance Index (IPI), to check which products are selling fast and which aren’t.
What is the cheapest way to send to the Amazon FBA warehouse?
The Amazon Partner Carrier program allows you to send inventory to Amazon FBA warehouses with discounted rates and select carriers. It is typically much cheaper than retail shipping rates. This program is only available in certain countries, but it still helps to save on the Amazon FBA inbound shipping cost.
For international shipping, comparing Amazon Global Logistics (AGL) price and quotes from different freight forwarders is a good practice to save the Amazon international shipping cost.
Does Amazon provide sellers with shipping discounts?
Yes, Amazon provides its sellers with shipping discounts through different programs, such as the Fulfilment by Amazon (FBA) program, Buy Shipping in Seller Central (for FBM sellers), the Amazon Partnered Carrier Program, and Amazon Global Logistics (AGL).
